13 Secrets to Stop Wasting Cash Now
You can destroy debts by finding extra money within your current budget, not by deprivation. The first thing to do in your hunt for debt-destroying cash is to stop wasting money. Think you’re innocent? Check out the list.
By Stacy W. Johnson
Not buying generics: While it’s true that some generics don’t measure up in quality to their higher-priced cousins, it’s also true that other generics are literally identical. Generic buffered aspirin isn’t almost like Bayer. It’s identical except for packaging and price. True of hundreds of items from patent medicines to bleach to spices. If you ever buy a name brand when there’s a cheaper and identical generic substitute available, you’re wasting cash.
Overpaying for Insurance: You have a small fender bender, but rather than report the $1,000 damage to your insurance company and risk an expensive blemish on your record, you pay for it yourself. Fine. But why do you have a $500 deductible on your policy? Raising your car, home--even health insurance--deductibles can reduce premiums and save you 10 - 20%, which can add up to hundreds of dollars a year. Hold onto that money and put it in a savings account to meet those higher deductibles should the need arise.
Buying water by the bottle: The dumbest thing I’ve seen in my 20 years as a consumer reporter is paying a buck for a bottle of water when you can get it home for virtually nothing. If you’re concerned about taste or quality, buy a filter.
Buying Books: Borrow the books you already bought with your tax dollars. They’re sitting at the nearest public library, along with magazines, DVDs and tons of other free entertainment. Buying books you’ll likely only read once is a money-waster. (If you do want to own a copy, make sure to buy it used.)
Not using Internet coupons: Saving money used to mean scouring the newspapers and clipping and organizing paper coupons. Now it’s all about typing what you’re looking for into a deals search engine. Shopping without taking a few seconds to do that is silly.
Paying 20% while you’re earning .2%: I understand the need for an emergency fund. But if you’re paying 20% on a credit card while earning .2% on your savings, you’re more likely to create an emergency than solve one. Not to mention that you're wasting a ton of money. (Exception: If you’re unsure about your job security, you want to marshal the maximum amount of cash possible.)
Splitting the cost of rarely used items: You’re off to Home Depot to buy a new, $250 lawn mower. While there, you run into your next-door neighbor who’s buying a hedge trimmer. Is a light-bulb going off? Form a neighborhood co-op and split the cost of things like lawn mowers, ladders, chainsaws and other rarely-used items with one or more neighbors. You’ll reduce both your cost and clutter by at least 50%.
Buying everything new: I’m 54 years old and have never owned a new car. Why should I? I drive a gorgeous $80,000 Mercedes that I bought six years old for $20,000. I also buy used tools and clothes. I’ve even bought used shoes. Buying used not only saves serious money, it also happens to be the single best way to be environmentally friendly.
Paying too much for food: Highly processed prepared foods are not just more expensive, they’re less healthy and less tasty. Don’t have time to cook from scratch? Do what I do: Cook when you can, but when you do, make huge portions and fill your freezer.
Not Bargaining: I recently did a TV news story in which, on camera, I called my cable company and simply threatened to take my business elsewhere (to satellite) if they wouldn’t lower my bill. Result? In 10 minutes, I saved $30 a month for six months for a total of $180. I routinely ask for a better price on virtually everything expensive that I buy, from appliances to hotel rooms. It takes seconds and saves tons.
Being a trendsetter. From fashion to electronics, being on the leading edge is both expensive and unnecessary. Yesterday’s computer technology is half the price. Classic fashion (especially for men) can literally last decades.
Paying for things you don’t use: Do you pay for premium cable channels you never watch? Health clubs you rarely visit? Magazines you don’t have time to read? Do you still really need your telephone land line? Really stare at where your money is going and see if there’s something you can live without.
Getting a Tax Refund: According to the IRS, the average American will get a $2,400 tax refund this year. This means that the average American has $200 too much withheld from their paycheck every month. Want to make a serious dent in your debt? Take your $2,400 refund this year and use it to pay down your debt. Then fill out a new W-4 and adjust your withholdings (carefully: there’s a calculator at irs.gov that will help) to increase your take-home pay by $200 a month. Use that extra money to pay down more debt monthly. Result? $4,800 of debt destroyed over the next 12 months with money you won’t really miss.
Stacy Johnson is the host of Money Talks News, a nationally-syndicated personal finance television news series. His third book, Life or Debt 2010, is available at booksellers everywhere. For more money-saving tips and advice, visit moneytalksnews.com.